Repo rate hike will deepen crisis in real estate: Credai

HYDERABAD: The Confederation of Real Estate Developers’ Associations of India (Credai) has expressed concern over the RBI decision to increase the repo rates by 25 bps to 8 per cent in the monetary policy review.

The step was unexpected as the industry was expecting RBI to give precedence to growth over inflation when prices are trending downwards, core inflation is within the comfort zone.

C Shekar Reddy, President Credai-National said, “The industry expected the RBI to maintain the status quo on rates as the index for industrial production was at the low of 2.1 per cent for December. The housing sector has a multiplier effect on the economy as it covers 300 allied industries.”

This stance is disappointing for the real estate industry. Just when we started to see some lift in home sales, this move can potentially derail the sector, which has been witnessing financial headwinds due to subdued sales and limited access to funding, he added.

He felt cost of funds available to developers is also likely to increase, which will impact companies’ earnings negatively.

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